Arbitrage Pricing Theory (APT) - Can it Enhance Valuation?
Equilest
JANUARY 3, 2023
This theory is based on the idea that several factors, including economic and market conditions, determine a stock's price. The APT is a multi-factor model that seeks to explain the behavior of stock prices based on various economic and market conditions. First, we need to estimate the factor loadings for each risk factor.
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